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Loretta Mester, president and chief executive of the Federal Reserve Bank of Cleveland, speaks Tuesday morning at a Dayton Area Chamber of Commerce government affairs breakfast meeting. THOMAS GNAU/STAFF

Cleveland Fed president reassures Dayton audience on stock concerns

At a time when market turmoil has observers avidly looking for any word from a Federal Reserve executive, the president of Cleveland’s Federal Reserve Bank came to Dayton Tuesday with a largely reassuring message.

A Dayton Area Chamber of Commerce audience, and members of the national media, appeared to hang on every word from Loretta Mester, who is also a voting member of the Federal Open Market Committee which decides whether interest rates go up or down. The committee next meets March 20-21.

Mester essentially expects the labor market to remain strong, inflation to rise at a sustainable pace — about two percent over the next year or two — and interest rates to go up this year and next, but at an “appropriate” pace — a pace not unlike last year’s.

U.S. and global stocks have veered down sharply in the past week into correction territory, mostly on fears that inflation and interest rates will heat up at an uncontrollable rate.

Mester sounded a mostly calming note at the Dayton Marriott, however.

“I believe this gradual upward path of interest rates will help balance the risks and prolong the expansion so that our longer-run goals of price stability and maximum employment are met and maintained,” Mester told a standing-room-only audience. “This policy path gives inflation time to move back to goal while, at the same time, avoiding a build-up of risks to macroeconomic stability.”

Mester toured West Dayton yesterday with questions about local housing values, said Phil Parker, president and CEO of the Dayton chamber. She’ll meet today with local bankers and others before heading back to Cleveland.